The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following:a. If sales for the current year were $753,500 and accounts receivable decreased by $48,400 during the year, what was the amount of cash received from customers?b. If income tax expense for the current year was $50,600 and income tax payable decreased by $5,500 during the year, what was the amount of cash payments for income taxes?c. Briefly explain why the cash received from customers in (a) is different from sales.

Question
Asked Dec 21, 2019
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The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following:
a. If sales for the current year were $753,500 and accounts receivable decreased by $48,400 during the year, what was the amount of cash received from customers?
b. If income tax expense for the current year was $50,600 and income tax payable decreased by $5,500 during the year, what was the amount of cash payments for income taxes?
c. Briefly explain why the cash received from customers in (a) is different from sales.

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Expert Answer

Step 1

a. Calculate the amount of cash received from customers.

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(+Decrease in Accounts Receivable (Cash received from customers Salesrevenue OR -Increase in Accounts Receivable = (Sales revenue + Decrease in Accounts Receivable) = (S753, 500+ $48, 400) = $801,900 Therefore, the amount of cash received from customers is $801,900.

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Step 2

b. Calculate the amount of cash payments...

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(+Decrease in income tax payable (Cash payments for` Income tax expense OR income taxes -Increase in income tax payable = (Income tax expense+ Decrease in income tax payable) = (S50,600 +$5,500) = $56,100 Therefore, the amount of cash paid for income taxes is $56,100.

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